ES Journal - 2019/2020

[QTrader20]

I agree with most of this.

My view is that the market is not random (unpredictable), but just because it's not random doesn't mean it's easily predictable either or that any given person who's new to this business can start predicting high probability outcomes. I don't think visually glancing at charts is a valid way of making predictions either, but if anyone is doing it consistently, I won't argue with them.

I use a predictive model which I started building 10 years ago and which I'm still refining. It's built on data and parameters. Not charts. Countless hours were spent figuring out all the necessary parameters and how they all interrelate. And I still have unanswered questions. But I've arrived at a place where I most often have a good expectation of the day ahead.

Still, I feel there a periods of times in the market where it seems truly random and unpredictable. Chaotic if you will. One example may be shortly after a news release or a FED statement or whatever when the market's oscillating in 10-30 point swings in fast sequence and there's no apparent direction. Some may say that this isn't random either and I may even agree with that as every price movement has its cause. I just don't think it's predictable with any reasonable degree of accuracy. Based on what I now know.

As for profiting from randomness is that's what someone believes: Enter on breakouts from a range and use a stop. But ES is probably not the best breakout market as often breakouts are false and reverse on you.

Same thing here that I already spent more than a decade to configure and improve and my trading setups. I agree with you that it's not as simple as taking a visual glance at price action and then making tons of money from there.

After spending more than a decade on observing price action, I'm pretty good at figuring out what market is likely going next within that a day or two, but when it comes to trading my setups don't care what I think or my view is because of rules that I've to follow and that I can't be biased.

I don't know about others. What I do know is that if one has the right configuration on their chose time frames and have spent enough times (let's say at least a year or two of solid works) to observe their charts, they will see the same thing repeated almost everyday. They will see that it's not random and this is where they should begin to focus on to find ways to capture the profits which I call a setup.

 

[trdes]

The setups arent random - they repeat in a cycle. The individual outcomes of said setups at any particular given time are random.

I don't know if I agree or fully understand what you're saying. There are clues left behind in the market by certain subsets of buyers. People that are buying large quantities of a stock or futures generally don't just press buy and sell for their entire order all at once, as they would be competing directly against themselves, they often look to get a net weighted average at general price points over time as they build into their position setting it up. Sure, they aren't always right so the setup could fail, but I wouldn't call it random as once they've committed to a setup there's an expectation of price moving in that direction more often than not.

 

[IamTheCasino]

I don't know if I agree or fully understand what you're saying. There are clues left behind in the market by certain subsets of buyers. People that are buying large quantities of a stock or futures generally don't just press buy and sell for their entire order all at once, as they would be competing directly against themselves, they often look to get a net weighted average at general price points over time as they build into their position setting it up. Sure, they aren't always right so the setup could fail, but I wouldn't call it random as once they've committed to a setup there's an expectation of price moving in that direction more often than not.

Setups repeat (not random) - the outcomes of said setups are randomized.

I can expect everything in the world, that doesnt mean it will play out that way when crunch time comes.

There is no way to tell a particular trade from a repeatable setup will be a winner or a loser. Therefore randomized. What we do know is that if you take the setup over and over again, you will come out a winner more times than not.

 

[trdes]

Setups repeat (not random) - the outcomes of said setups are randomized.

I can expect everything in the world, that doesnt mean it will play out that way when crunch time comes.

There is no way to tell a particular trade from a repeatable setup will be a winner or a loser. Therefore randomized. What we do know is that if you take the setup over and over again, you will come out a winner more times than not.

Ok, I apologize if my communication and choice of words are lacking. All I am saying is it's possible to determine the direction of the markets during certain setups using clearly defined perimeters in excess of moving in that direction above a 50% probability.

 

[SammyJ]

The facts are your setups might eventually be correct more than 50/50. The question to be answered as a trader with stops will you be stopped out before your setup trade is correct more than 50/50?Being right on the big pic at the day is meaningless.

 

[Huyang]

The setups arent random - they repeat in a cycle. The individual outcomes of said setups at any particular given time are random.

IamTheCasino: it seems you have read very carefully the book Trading in the Zone or the Disciplined Trader by Mark Douglas, right?

The below is based on the book Trading in the Zone by Mark Douglas although not exactly his words.

Therefore, the above five truths about the nature of trading can be modified to the following two truths.
1. There is a random distribution of wins and losses for any trade.
• Anything can happen
• Every moment in the market is unique.

2. An edge is that a series of trades have a positive expectation.
• Do not need to know what is going to happen next in order to make money.

To summarize in essence ( although not precise), one style of consistently profitable trading is to toss the same coin over and over again which has a positive expectation.

 

[Laissez Faire]

10 years ... with how manys hours sunk into this endeavor, to give us beginners an idea?

You registered one year before me - so I'll hardly consider you more of a newbie than me.

I created version 1.0 in 2012 and had a professional company design it, but quickly discovered shortcomings and there's been many changes throughout the years. I'm probably at version 1.8 now. I have no ideas how many hours I've sunk into this by now, but I've taken a degree and worked full time in between, so definitely not 10 years of full focus, but periodically very intense and I'm sure I've done my 10.000 hours total and more since I started this endeavor.

If I knew how much work it would be to make it as a day trader I would probably have done something else instead. This is why I wouldn't recommend anyone to pursue day trading unless they have a very long time horizon and simply enjoy the puzzle or find enjoyment in it.

 

[Laissez Faire]

What I do know is that if one has the right configuration on their chose time frames and have spent enough times (let's say at least a year or two of solid works) to observe their charts, they will see the same thing repeated almost everyday. They will see that it's not random and this is where they should begin to focus on to find ways to capture the profits which I call a setup.

The market definitely isn't random. But even still - it's not always easy to monetize that. Even if you have a profitable system or set-ups. I still struggle with things like entering too early (FOMO), risk management or even projecting my own views/wishes on the market.

An optimal system removes the discretionary element, i.e., interpretation. If you can't do that - at least try to remove as much discretion as possible. In my opinion of course.

 

[Laissez Faire]

Being right on the big pic at the day is meaningless.

How can that be meaningless?

If you're consistently right on the big picture you're rich.

 

[oraclewizard77]

A setup with positive expectancy on equal risk vs reward is an edge. After that it's trade management, and controlling your emotions, and not over trading.

A setup with negative expectancy on unequal risk vs reward, is an edge. After that it's trade management, and controlling your emotions, and not over trading.

A random outcome does not negatively impact either methodology.